China property developers cash-starved amid gov't tightening (2)

DEVELOPERS FEEL THE PINCH OF A TIGHTENED BELT.
Guangzhou R&F Properties, which targets home buyers in big cities, said in its first-quarter report that it had sold 27 percent fewer homes in area and 44.6 percent less in value year on year in the first three months of 2011.
"The cash flow for China's property developers will become tighter as most of them rely heavily on sales proceeds to service large land payments," said Zhuang Jian, a senior economist with the Asian Development Bank.
China Poly Real Estate Group, the country's second largest property developer by market value, saw its free cash flow fall to 22.37 billion, a 1854 percent year-on-year drop from 2009, according its 2010 annual report.
Other heavyweights such as China Vanke, the largest developer in China, and Beijing Capital Development, suffered from a drop of at least seven billion yuan in operating cash flow, the companies' annual reports showed.
Financing problems were also evident after some 20 developers announced in their reports that their dividends would be used to finance ongoing projects and replenish cash flow instead of going to investors in 2011.
In February, Rating agency Standard & Poor's revised the rating outlooks of developers Glorious Property Holdings, Kaisa Group Holdings and Renhe Commercial Holdings to negative because of their aggressive fund-raising overseas, Shanghai Securities News reported Tuesday.
Zhuang said this showed that measures to cool the overheated housing market were working, although no definite turning point was in sight.
"Property developers' financing has definitely turned tight, but it is too early to say the turning point of housing prices has come," he said.
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